Why the PRA prefers subsidiaries for retail businesses

Author: Ashley Lee | Published: 10 Nov 2014

The UK’s Prudential Regulatory Authority (PRA)
has followed other regulators globally and encouraged the
subsidarisation of branches catering to retail customers. But
the regulator does not expect a material change in the number
of branches in the UK.

Regulators and market participants globally have debated the
value of international banks having subsidiaries or branches in
their host jurisdictions. Some, like the US, have required
international banks of a certain size or that are pursuing
certain business to set up subsidiaries in the jurisdiction,
while others are requiring branches to fulfill local liquidity
requirements.

The UK has made its policy clear. The PRA, a regulator
wholly owned...